627 F.

2d 843

FIRST NATIONAL BANK OF ABERDEEN and First

National Bank of
Aberdeen, Redfield Branch, a national banking
corporation, Appellants,
v.
ABERDEEN NATIONAL BANK, also using name First Bank
(N.A.)
Aberdeen and the Spink County Branch of the
Aberdeen National Bank, also using name
First Bank (N.A.) Redfield, Appellees.
FIRST NATIONAL BANK OF DULUTH, Appellant,
v.
NORTHERN CITY NATIONAL BANK and Duluth National
Bank, Appellees.
Nos. 79-1612, 79-1644.

United States Court of Appeals,

Eighth Circuit.
Submitted Jan. 16, 1980.
Decided Aug. 6, 1980.

Lloyd C. Richardson, Jr., Aberdeen, S. D., for appellant in case no. 791612.
Thomas R. Thibodeau and James A. Wade, Duluth, Minn., for appellant
in case no. 79-1644.
R. D. Miller, Aberdeen, S. D., for appellee in case no. 79-1612.
David A. Ranheim and Darron C. Knutson, Minneapolis, Minn. for
appellee in nos. 79-1612, 79-1644.
Before LAY, Chief Judge, and HEANEY, BRIGHT, ROSS,
STEPHENSON, HENLEY and McMILLIAN, Circuit Judges, En Banc.

HENLEY, Circuit Judge.

These two consolidated appeals raise the same substantive issue decided by us
today in State of North Dakota v. Merchants National Bank & Trust Co., No.
79-1342 (8th Cir. 1980): whether section 30 of the National Bank Act (NBA)
preempts the common law of unfair competition insofar as applied to
Comptroller-approved name changes by national banks. But unlike the plaintiff
in North Dakota, plaintiffs in the present cases commenced their actions in state
court and did not join claims as to which federal jurisdiction indisputably
existed. The defendant national banks removed the suits to federal court and
subsequently secured judgments on the merits. For reasons to be stated, we
conclude that in each case the district court lacked removal jurisdiction and
should have remanded the case to the state court.

FACTS AND PROCEDURAL BACKGROUND

No. 79-1612
2

In January, 1978, the Aberdeen National Bank (defendant herein) applied to the
Comptroller of the Currency under section 30 of the NBA1 to change its name
to "FIRST BANK (N.A.)." Pursuant to procedural rules issued by the
Comptroller, notice of the proposed change was published in local newspapers
and in the Comptroller's regional bulletin, which was mailed to plaintiff First
National Bank of Aberdeen and to other competing banks in the Aberdeen,
South Dakota, area. The banks were thereby notified of their right to object to
the proposed name change and to obtain upon request a hearing before the
Comptroller. No objection to the change was filed, and in December, 1978 the
Comptroller approved the application. On April 6, 1979 defendant began using
its new name.

Four days later, on April 10, 1979, plaintiff brought this action for unfair
competition in South Dakota state court, seeking to enjoin defendant2 from
using the terms "First" or "1st" or any variation thereof in its new name or "in
any other way whatsoever in connection with advertising or labeling in its
business or affairs." The complaint alleged that plaintiff, through long use of its
name and extensive advertising, had come to be recognized by the public as the
"First National Bank," "1st National Bank," "First Bank," or "any derivative
thereof which employs the term 'First' or '1st' in conjunction with a national
bank." It was further alleged that defendant and its branch had begun using and
advertising under the names "First Bank Aberdeen," "First Bank Redfield,"
"First Bank (N.A.) Aberdeen," and "First Bank (N.A.) Redfield," and that

defendant's adoption of these names would mislead the public and would
unfairly appropriate plaintiff's reputation and goodwill, in violation of the
South Dakota law of unfair competition. The complaint contained no reference
to the National Bank Act or to the Comptroller's approval of defendant's name
change.
4

Defendant removed the suit to federal district court, primarily on the ground
that the action arose under federal law, and plaintiff sought remand. Plaintiff
argued, first, that removability of an action must be determined from the
complaint, and the complaint in this case was based solely on South Dakota
law. Secondly, plaintiff relied on Marquette National Bank v. First National
Bank of Omaha, 422 F.Supp. 1346 (D.Minn.1976), for the proposition that the
assertion of federal preemption in defense of a state law claim does not provide
grounds for federal jurisdiction. Next, plaintiff acknowledged that the
Comptroller had approved a change of defendant's name, but disavowed any
intent to challenge that decision and stated that its claim of unfair competition
was restricted to defendant's use of new names that had not been approved by
the Comptroller.3 Finally, plaintiff rejected the idea that defendant was a
"person acting under" the Comptroller or that defendant's adoption of a new
name was an "act under color of (the Comptroller's) office," for purposes of
removal under 28 U.S.C. 1442(a)(1).4

Defendant replied that removal was proper on two alternative grounds. First,
defendant contended that section 30 of the NBA preempted the state law of
unfair competition insofar as the state law "might otherwise seek to regulate the
names under which national banks may conduct their business." Thus,
plaintiff's complaint, though phrased solely in terms of state law, actually stated
a claim in an area governed exclusively by federal law (section 30), the claim
arose under that law, and removal was proper because the district court would
have had original jurisdiction. Secondly, defendant maintained the case was
properly removed pursuant to 28 U.S.C. 1442(a)(1).

In addition to arguing the removability of the case, defendant moved to dismiss

the complaint for failure to state a claim on which relief could be granted. For
the purposes of this opinion, it is unnecessary to discuss the parties' arguments
on this motion.

In June, 1979, the district court denied plaintiff's motion to remand and granted
defendant's motion to dismiss.5 Accepting in major part the arguments of
defendant, the court held that, because of the preemptive effect of section 30,
plaintiff's claims arose solely under federal law. Removal was therefore proper,
since the court would have had original jurisdiction of the action.6 The court

based its dismissal of the complaint on the finding that plaintiff's state rights
were preempted and, apparently, on the unstated conclusion that plaintiff had
no right of action under the federal statutory scheme.7
8

Plaintiff has appealed, arguing that the finding of preemption upon which the
district court's rulings were based was incorrect. Appellant seeks remand of the
case to the South Dakota state court for decision on the merits.

No. 79-1644
9

In December, 1977, Northern City National Bank and Duluth National Bank
(defendants herein) applied to the Comptroller to change their names to "FIRST
BANK (N.A.) Duluth" and "FIRST BANK (N.A.) Duluth West," respectively.
The plaintiff, First National Bank of Duluth, objected to the proposed changes
and requested a hearing before the Comptroller. At the hearing, plaintiff was
allowed to present its evidence, consisting mostly of testimony by its officers,
that the new names would be confusingly similar to plaintiff's name and would
permit defendants to usurp plaintiff's goodwill in the Duluth, Minnesota,
market. Subsequently, in December, 1978, the Comptroller issued his approval
of the name changes.

10

Plaintiff did not seek judicial review of this decision. Instead, it immediately
brought this suit for unfair competition and deceptive trade practices in
Minnesota state court, seeking to enjoin defendants from using the terms "First"
or "1st" or any variation thereof in their new names. Plaintiff alleged in its
complaint that, through long use of its name and extensive advertising, it had
come to be known by the public as the "First National Bank," "1st National
Bank," or "any derivative thereof which employs the terms 'First' or '1st' in
conjunction with a national bank." It was then alleged that defendants had
obtained the Comptroller's approval of the new names stated above, and that
implementation of these name changes would confuse and mislead the public
and would cause "irreparable injury and damage . . . to the plaintiff's good
name, reputation, and business." The complaint made no mention of the
National Bank Act and referred to the Comptroller's approval of defendants'
new names only in pleading the imminence of the threatened name changes. 8

11

Defendants removed the action to federal court, and plaintiff sought remand.
Like the plaintiff in Aberdeen, it argued that its complaint stated a claim based
exclusively on state law and the action therefore could not be removed as
arising under federal law. Secondly, plaintiff maintained that the case was not
removable under 28 U.S.C. 1442(a)(1), for the same reasons given by the
plaintiff in Aberdeen.9

12

In response, defendants contended that section 30 of the NBA

13
wholly
supplants state law on the subject of the name under which a national bank
may do business. Thus, any action complaining of a national bank's use of a
particular name necessarily arises under federal law and is subject to removal under
28 U.S.C. 1441.
14

Defendants also argued that removal was proper under 28 U.S.C. 1442(a)(1).

15

In April, 1979, in an unpublished memorandum, Magistrate Patrick J. McNulty

recommended that plaintiff's motion to remand be denied. After discussing
relevant cases, the magistrate stated a general "guide" to determine whether an
action "arises under" federal law for purposes of original or removal
jurisdiction: If the complaint discloses, "as innate to the action," the existence
of a "basic dispute . . . as to the effect of a federal law" and the "resolution of
(this dispute) is necessary to the determination of the rights of the parties," then
the action arises under federal law. Applying this principle to the instant case,
Magistrate McNulty found there was a "basic dispute" whether "the right of a
national bank to change its name in accordance with the (NBA)" was or was not
limited by state unfair competition law. The magistrate observed that although
"Plaintiff's Complaint (did) not mention federal law . . . that law permeate(d)
and mold(ed) the character of the cause of action." The action therefore was
said to be one arising under federal law, and the suit was held to be
removable.10

16

In May, 1979, the district court11 accepted the magistrate's recommendation and
denied remand. Plaintiff then moved for reconsideration and suspension of the
ruling until this court's decision of the North Dakota appeal, and for an
injunction barring the name changes pending final disposition of the case.
Defendants moved for summary judgment on the grounds that section 30
preempted state law insofar as the latter applied to name changes by national
banks and that the Comptroller's approval of such a name change, "subject to
federal judicial review under the Administrative Procedure Act, is the final
word on the subject."

17

The matter was again referred to Magistrate McNulty, who, in June, 1979,
recommended that reconsideration of the remand motion be denied, that
defendants be granted summary judgment, and that a stay of the name changes
be granted pending appeal. The magistrate based his recommendation of
summary judgment on his finding that section 30 was preemptive, as
defendants argued. In July, 1979, the district judge accepted this
recommendation and entered judgment accordingly.

18

Plaintiff appeals from that judgment, urging reversal on the ground that the
district court's underlying finding of preemption was incorrect. Appellant
requests that the case be remanded to the Minnesota state court for decision on
the merits.

DISCUSSION
19

The appellant in each of these cases, without expressly mentioning subject

matter jurisdiction or removal jurisdiction, argues that the case should be
remanded to the state court because, contrary to the district court's holding,
section 30 of the NBA does not preempt state unfair competition law.
Appellants do not, however, question the district courts' premises for denying
remand: that preemption of the law on which plaintiff states his claim
(Aberdeen ) or a not insubstantial assertion of such preemption (Duluth),
converts a case apparently based solely on state law into one arising under
federal law. Because we hold these premises invalid12 and because no other
grounds for removal existed, the district courts lacked subject matter
jurisdiction and the cases must be remanded to the state courts.

20

In most instances, the removability of an action depends on whether the district

court would have original jurisdiction of the action. 13 The general rule is set out
in 28 U.S.C. 1441 (1976), which provides in part:

21

(a) Except as otherwise expressly provided by Act of Congress, any civil action
brought in a State court of which the district courts of the United States have
original jurisdiction, may be removed by the defendant or the defendants, to the
district court of the United States for the district and division embracing the
place where such action is pending.

22

(b) Any civil action of which the district courts have original jurisdiction
founded on a claim or right arising under the Constitution, treaties or laws of
the United States shall be removable without regard to the citizenship or
residence of the parties.

23

Whether removal of the present two cases was proper hinges on defendants'
assertion that the causes arose under federal law and the district courts therefore
had original jurisdiction under 28 U.S.C. 1331(a) or 28 U.S.C. 1337(a).14

24

Formulation of a general test for determining when an action "arises under"

federal law has eluded the courts for more than a century, see C. WRIGHT, A.
MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE 3562

(1975) (hereinafter cited as WRIGHT, MILLER & COOPER), and attempts at

such a formulation were specifically warned against by the Supreme Court in
an in-depth discussion of the subject, Gully v. First National Bank in Meridian,
299 U.S. 109, 117, 57 S.Ct. 96, 99, 81 L.Ed. 70 (1936). As stated in Gully,
however, certain prerequisites are well established. Perhaps the most basic are
that a right created by federal law must be an essential element of plaintiff's
cause of action, and that the centrality of this federal claim must appear on the
face of the "well-pleaded complaint," unaided by the answer or petition for
removal. E. g., Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-28, 94
S.Ct. 1002, 1003-1004, 39 L.Ed.2d 209 (1974); Pan American Petroleum Corp.
v. Superior Court, 366 U.S. 656, 662-63, 81 S.Ct. 1303, 1307, 6 L.Ed.2d 584
(1961); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672, 70 S.Ct.
876, 879, 94 L.Ed. 1194 (1950); Gully, 299 U.S. at 112-13, 57 S.Ct. at 97; The
Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57
L.Ed. 716 (1913); Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 152,
29 S.Ct. 42, 43, 53 L.Ed. 126 (1908); Tennessee v. Union & Planters' Bank,
152 U.S. 454, 461-62, 14 S.Ct. 654, 656-657, 38 L.Ed. 511 (1894); Home
Federal Savings & Loan Ass'n v. Insurance Department, 571 F.2d 423, 425-26
(8th Cir. 1978); Chandler v. O'Bryan, 445 F.2d 1045, 1055-56 (10th Cir. 1971)
(Van Oosterhout, Mehaffy & Gibson, JJ., sitting by designation), cert. denied,
405 U.S. 964, 92 S.Ct. 1176, 31 L.Ed.2d 241 (1972); Rosecrans v. William S.
Lozier, Inc., 142 F.2d 118, 121, 123 (8th Cir. 1944); Jones Store Co. v.
Hammons, 424 F.Supp. 494, 498-99 (W.D.Mo.1977); Gatch v. Hennepin
Broadcasting Associates, Inc., 349 F.Supp. 1180 (D.Minn.1972). Furthermore,
"the complaint itself will not avail as a basis of jurisdiction in so far as it goes
beyond a statement of the plaintiff's cause of action and anticipates or replies to
a probable defense." Gully, 299 U.S. at 113, 57 S.Ct. at 98, quoted in Phillips
Petroleum Co. v. Texaco Inc., 415 U.S. at 128, 94 S.Ct. at 1004; and Home
Federal Savings & Loan Ass'n v. Insurance Department, 571 F.2d at 426;
accord, e. g., Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. at 672, 70 S.Ct.
at 879; The Fair v. Kohler Die & Specialty Co., 228 U.S. at 25, 33 S.Ct. at 411;
Louisville & Nashville R.R. v. Mottley, 211 U.S. at 152-54, 29 S.Ct. at 43-44;
Tennessee v. Union & Planters' Bank, 152 U.S. at 464, 14 S.Ct. at 657. Thus, it
is well settled that the federal question upon which plaintiff relies for original
federal jurisdiction, or defendant for removal jurisdiction, must not have
entered the case by way of defense. It also follows from the foregoing
principles that "the party who brings a suit is master to decide what law he will
rely upon and therefore does determine whether he will bring a 'suit arising
under' (federal law) by his declaration or bill." The Fair v. Kohler Die &
Specialty Co., 228 U.S. at 25, 33 S.Ct. at 411, quoted in Pan American
Petroleum Corp. v. Superior Court, 366 U.S. at 662, 81 S.Ct. at 1307.
25

Application of the preceding rules seems to indicate that neither of the present

25

Application of the preceding rules seems to indicate that neither of the present
two actions arises under federal law. In neither case does the complaint show a
federal right to be an essential element of plaintiff's claim. Nor are the
complaints deficient; each appears to set forth a well-pleaded state claim of
unfair competition. The issue of federal preemption has entered the cases only
by way of defendants' answers or petitions for removal.

26

The defendants, however, have contended, and the district courts have agreed,
that a defense of preemption differs from other state law defenses in that
preemption completely eliminates the legal foundation of plaintiff's claim,
whereas other defenses merely contest the applicability of the state law to the
given fact situation. It is argued that, in cases where the defendant alleges
preemption and removes the case on that ground, the general rules for
determining whether an action arises under federal law should not be followed
strictly. Instead, the removal court must look beyond plaintiff's complaint in
order to ascertain what law the action really arises under, and for that purpose
must determine the validity of defendant's assertion of preemption. If the state
law basis of plaintiff's claim is in fact preempted, it is said that the claim
necessarily arises under federal law and the removal court has jurisdiction.15

27

Many cases support this argument, holding or implying that preemption of the
law on which plaintiff founds his claim provides a basis for removal
jurisdiction. See, e.g., Avco Corp. v. Aero Lodge No. 735, IAM, 390 U.S. 557,
88 S.Ct. 1235, 20 L.Ed.2d 126 (1968); North Davis Bank v. First National
Bank of Layton, 457 F.2d 820, 822-23 (10th Cir. 1972) (by implication),
criticized in 13 WRIGHT, MILLER & COOPER 3562, at 407 n. 31; Johnson
v. England, 356 F.2d 44, 46-48 (9th Cir.), cert. denied, 384 U.S. 961, 86 S.Ct.
1587, 16 L.Ed.2d 673 (1966); Teamsters Local 116 v. Fargo-Moorhead
Automobile Dealers Ass'n, 459 F.Supp. 558 (D.N.D.1978); First Federal
Savings & Loan Ass'n of Jackson County v. First Federal Savings & Loan
Ass'n of Huntsville, 446 F.Supp. 210 (N.D.Ala.1978); Ashley v. Southwestern
Bell Telephone Co., 410 F.Supp. 1389, 1392 (W.D.Tex.1976) (dictum); New
York v. Local 144, Hotel Services Union, 410 F.Supp. 225 (S.D.N.Y.1976);
Rettig v. Arlington Heights Federal Savings & Loan Ass'n, 405 F.Supp. 819,
822-23 (N.D.Ill.1975); City of New Orleans v. United Gas Pipe Line Co., 390
F.Supp. 861, 863 (E.D.La.1974) (by implication); Gardner v. Clark Oil &
Refining Corp., 383 F.Supp. 151, 152-53 (E.D.Wis.1974) (dictum); Hayes v. C.
Schmidt & Sons, 374 F.Supp. 442, 445 (E.D.Pa.1974) (dictum); Sylgab Steel &
Wire Corp. v. Strickland Transportation Co., 270 F.Supp. 264, 269
(E.D.N.Y.1967).

28

At least an equally large body of authority holds to the contrary that an

assertion of preemption is a defense to plaintiff's state law claim and not a

ground for federal jurisdiction. See, e.g., Washington v. American League of

Professional Baseball Clubs, 460 F.2d 654, 660 (9th Cir. 1972); Long Island R.
R. v. United Transportation Union, 103 L.R.R.M. 2703 (S.D.N.Y.1980);
Nevada v. King, 463 F.Supp. 749, 751-52 (D.Nev.1979); Marquette National
Bank v. First National Bank of Omaha, 422 F.Supp. 1346, 1350-53
(D.Minn.1976) (alternative holding); Committee of Interns & Residents v. New
York State Labor Relations Board, 420 F.Supp. 826, 831 (S.D.N.Y.1976);
Johnson v. First Federal Savings & Loan Ass'n, 418 F.Supp. 1106, 1108-09
(E.D.Mich.1976); New York v. Local 1115, Nursing Home & Hospital
Employees Division, 412 F.Supp. 720 (E.D.N.Y.1976); Lowe v. Trans World
Airlines, Inc., 396 F.Supp. 9, 12 (S.D.N.Y.1975) (alternative holding);
Application of New York, 362 F.Supp. 922, 928 (S.D.N.Y.1973) (dictum).
29

The latter view finds strong support in Home Federal Savings & Loan Ass'n v.
Insurance Department, 571 F.2d 423 (8th Cir. 1978), which held that a
declaratory plaintiff who seeks to enjoin, on the ground of preemption, the
declaratory defendant's pending state court action does not state a claim arising
under federal law. The facts of the case were as follows. The defendant Iowa
insurance commissioner had begun administrative proceedings to determine
whether plaintiff Home Federal, a national savings and loan association located
in Iowa, had violated Iowa law prohibiting the conditioning of a loan or credit
upon the applicant's first obtaining insurance from a specified agent. Home
Federal replied to the commissioner that it was not engaged in the insurance
business and that, in any event, the federal law under which it was chartered
preempted state regulation of its operations. The commissioner rejected these
arguments and found the state statutes applicable.

30

Home Federal sought review of this decision in both state and federal court,
requesting the latter to grant declaratory and injunctive relief. The district court
held that it had jurisdiction. On appeal this court reversed and remanded with
directions to dismiss for lack of jurisdiction. The court's holding was stated as
follows:

31 Commissioner's proceeding against Home Federal was based solely upon

(T)he
alleged violations of Iowa's insurance law and raised no federal question. Home
Federal's allegations of preemption and failure to engage in the "business of
insurance," asserted in its federal petition, actually are in the nature of defenses to
the Commissioner's charges. Hence they will not suffice for federal question
jurisdiction here. The case is basically simply an alleged violation of state law. It is
not a federal case and is not converted to one by Home Federal's defenses to the
state's basic allegations.

32

571 F.2d at 427.

33

In similar vein runs the well-reasoned opinion of Judge Alsop in Marquette

National Bank v. First National Bank of Omaha, 422 F.Supp. 1346
(D.Minn.1976). There, a Minnesota national bank brought suit in Minnesota
state court against a Nebraska national bank, a Nebraska financial services
corporation licensed to operate in Minnesota, and a Minnesota credit bureau.
The complaint alleged that defendants violated several Minnesota consumerprotection laws by inducing Minnesota residents to join the Nebraska bank's
credit card program and by then assessing higher finance charges than were
permitted under Minnesota law. Defendants removed the case to federal court
on the ground that 12 U.S.C. 85, which governs the interest rate national
banks may charge on loans, preempted all state regulations on that subject, and
therefore plaintiff's claim of excess interest charges arose solely under federal
law. The court granted plaintiff's motion to remand, holding that "(f)ederal
preemption may offer a valid defense to a state law claim, but preemption does
not convert a state law claim to which preemption is a defense into a claim
arising under federal law." Id. at 1352 (alternative holding).

34

Here also, we conclude that the defendants' allegations of preemption in

Aberdeen and Duluth were defenses to plaintiffs' state law claims and not
grounds for removal, the district courts did not have jurisdiction based on a
federal question or otherwise, and the cases should be remanded to the state
courts.

35

We deem our conclusion not only consistent with authoritative statements on

the general principles of federal question jurisdiction, but also necessarily
required by the Supreme Court's reasoning and language in Gully v. First
National Bank in Meridian, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936). In
Gully, the defendant national bank had contractually assumed all the assets and
liabilities of an insolvent national bank. The state tax collector sought payment
of back taxes allegedly owed by the predecessor bank and, when defendant
failed to pay them, brought suit upon the contract in state court. Defendant
removed the case to federal court, alleging that the case arose under a provision
of the National Bank Act which permits states to tax the shares of resident
national banks. The district court denied the motion to remand and dismissed
the complaint on the merits. This judgment was affirmed by the court of
appeals. In reversing the finding of jurisdiction, the Supreme Court stated:

36 tax here in controversy, if valid as a tax at all, was imposed under the authority
The
of a statute of Mississippi. . . . True, the tax, though assessed through the action of
the state, must be consistent with the federal statute consenting, subject to

restrictions, that such assessments may be made. . . . It must also be consistent with
the Constitution of the United States. . . . If there were no federal law permitting the
taxation of shares in national banks, a suit to recover such a tax would not be one
arising under the Constitution of the United States, though the bank would have the
aid of the Constitution when it came to its defense.
37

299 U.S. at 115, 57 S.Ct. at 99 (emphasis added). Later in the opinion, the
Court stated:

38 unimpeachable authority, a suit brought upon a state statute does not arise under
By
an act of Congress or the Constitution of the United States because prohibited
thereby.
39

Id. at 116, 57 S.Ct. at 99 (emphasis added) (citing Louisville & Nashville R. R.

v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908)). These quoted
passages clearly suggest that the Gully Court believed a defensive assertion of
preemption did not give rise to federal question jurisdiction.

40

In coming to decision we are not unmindful of Avco Corp. v. Aero Lodge 735,
IAM, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) (Douglas, J.). There,
the petitioner employer had brought suit in state court to enforce a no-strike
clause in its contract with the respondent union. After the state court had
granted an ex parte injunction, the union removed the case to federal court. The
district court denied petitioner's motion to remand and dissolved the state
court's injunction. This order was affirmed by the court of appeals and the
Supreme Court.

41

In holding that the case was properly removed, the Court began by
characterizing petitioner's suit as one arising under section 301(a) of the Labor
Management Relations Act (LMRA).16 Because its previous decisions had held
that the law to be applied in a section 301(a) action is exclusively federal, either
statutory or common, the Court concluded

42 the claim under this collective bargaining agreement is one arising under the
that
"laws of the United States" within the meaning of the removal statute. 28 U.S.C.
1441(b). It likewise seems clear that this suit is within the "original jurisdiction" of
the District Court within the meaning of 28 U.S.C. 1441(a) and (b).
43

Id. at 560, 88 S.Ct. at 1237. The Court expressly based its finding of original
jurisdiction on 28 U.S.C. 1337.17 Id. at 561-62, 88 S.Ct. at 1237-1238.

44

The Avco holding could be characterized simply as a finding that section

44

The Avco holding could be characterized simply as a finding that section

301(a) of the LMRA gives district courts the original jurisdiction required for
removal under 28 U.S.C. 1441(a). Such an approach to finding removal
jurisdiction of a labor dispute was taken in Central Metal Products, Inc. v.
UAW Local 1249, 195 F.Supp. 70 (E.D.Ark.1961).

45

Avco also might be construed as agreeing with the assertion made in a leading
treatise that:

46

When state law has been preempted, removal will depend upon whether it has
been replaced by a federal right of action and whether the particular plaintiff's
rights under state law clearly have been preempted.

47

14 WRIGHT, MILLER & COOPER 3722, at 80 (Supp.1978) (footnote

omitted). A plaintiff whose state labor law claim is preempted and whose case
is removed on that ground will, in most instances, have a federal right of action
under section 301(a). Plaintiffs in Aberdeen and Duluth, on the other hand,
clearly have no right of action under section 30 or any other provision of the
National Bank Act,18 and in contrast to the clear force of prior LMRA decisions
in Avco, the question of preemption in these cases was very much open when
the district courts essayed to address it.

48

But however Avco may be interpreted in special circumstances, we are not

persuaded that the Supreme Court in Avco intended to invalidate the generally
accepted principle that defensive assertion of federal preemption in response to
a state law claim may not constitute a ground for removal.

49

Accordingly, the holdings of the district courts that they had removal
jurisdiction are reversed, the judgments are vacated and the cases are remanded
with instructions to remand to the state courts.

12 U.S.C. 30 (1976) provides:

Any national banking association, with the approval of the Comptroller of the
Currency, may change its name . . . A duly authenticated notice of . . . the new
name . . . shall be sent to the Comptroller of the Currency; but no change of
name . . . shall be valid until the Comptroller shall have issued his certificate of
approval of the same.

Although the Spink County Branch of Aberdeen National Bank was designated
by plaintiff as a separate party defendant and was described in plaintiff's

complaint as a "wholly owned subsidiary" of Aberdeen National Bank, the

latter has stated that it and its branch in Spink County are a single legal entity,
and we shall refer to them as "defendant." The record clearly shows that
defendant filed only one name-change application with the Comptroller and the
only change approved by the Comptroller was from "Aberdeen National Bank"
to "FIRST BANK (N.A.)."
3

Technically, this assertion was correct. As the complaint is now worded,

however, plaintiff's whole case rests on the theory that any use by defendant of
the term "First" or "1st" in its new name constitutes unfair competition. Trial of
the issues on the complaint so broadly read might bring about precisely the
kind of conflict that our holding of preemption in State of North Dakota v.
Merchants National Bank & Trust Co. is meant to preclude
On remand, however, plaintiff may seek to amend its complaint to allege that
defendant adopted new names which were not approved by the Comptroller
and which for reasons other than the mere incorporation of "First" or "1st"
violated the unfair competition law of South Dakota. Thus, the state court may
have to decide which variations, if any, of "FIRST BANK (N.A.)" are close
enough to that approved name to be deemed "approved by the Comptroller."
We also note that, in its memorandum supporting the motion to remand,
plaintiff claimed that defendant, after approval of its new name, "erected signs
and advertising similar in nature to the signs and advertisements of plaintiff and
. . . deliberately set forth on a course of conduct designed to appropriate all of
the value, prestige and good will" associated with plaintiff's name. As we
pointed out in the North Dakota opinion, the preemptive effect of 30 and the
immunization from liability gained by a national bank upon the Comptroller's
approval of its name change extend only to claims of unfair competition that are
based solely on the similarity of the new name itself to that of an existing
institution. A national bank that uses its new name in connection with a
confusing, deceptive, or misleading logo, letterhead, advertisement, or the like,
may remain subject to liability under state unfair competition law.

28 U.S.C. 1442 (1976) provides in part:

(a) A civil action or criminal prosecution commenced in a State court against
any of the following persons may be removed by them . . .:
(1) Any officer of the United States or any agency thereof, or person acting
under him, for any act under color of such office or on account of any right, title
or authority claimed under any Act of Congress for the apprehension or
punishment of criminals or the collection of the revenue.

First National Bank of Aberdeen v. Aberdeen National Bank, 471 F.Supp. 460
(D.S.D.1979), The Honorable Fred J. Nichol, Chief Judge, United States
District Court for the District of South Dakota

In reaching this conclusion, the court found that the value of the right asserted
by plaintiff exceeded the $10,000 jurisdictional amount required by the general
federal question statute, 28 U.S.C. 1331(a). Alternatively, the court held that
the NBA was an "Act of Congress regulating commerce" for purposes of 28
U.S.C. 1337(a), which confers jurisdiction of a suit arising under such an act,
regardless of the amount in controversy. The court rejected, however,
defendant's argument that removal was proper under 28 U.S.C. 1442(a)(1).
See 471 F.Supp. at 466-67

The court did not mention that plaintiff's unfair competition claim was founded
on defendant's alleged use of names not approved by the Comptroller. See note
3 supra. The omission of any such reference was not inconsistent with the
theory of preemption adopted by the court: that Congress, in enacting 30, had
"occupied the field" consisting of laws applicable to name changes by national
banks. Under this view, a state claim of unfair competition based on a national
bank's use of a new name would be preempted, regardless of whether the
Comptroller had approved the name
In the North Dakota case, however, we have rejected this view of the
preemptive effect of 30 and have held that only state law which conflicts with
30 is preempted by the section. Thus, insofar as plaintiff's unfair competition
action is based on defendant's use of names not approved by the Comptroller,
the action is not necessarily preempted. See note 3 supra.

In fact, the complaint did not expressly refer to either federal or state law and
did not name the theory on which plaintiff sought injunctive relief. It is clear,
however, from statements made by plaintiff's counsel in the state court, soon
after filing the complaint, that plaintiff intended to rely solely on state law.
Furthermore, in memoranda submitted in the federal district court and in
subsequent references, plaintiff has characterized its suit as one for violation of
state law relating to unfair competition and deceptive trade practices. The
allegations of the complaint seem wholly consistent with this description and,
on their face, do not appear to state a claim under any federal law

See note 4 supra and accompanying text

10

The magistrate made the same findings as the Aberdeen court on the presence
of the required amount in controversy and the alternative applicability of 28
U.S.C. 1337. See note 6 supra. Like the Aberdeen court, Magistrate McNulty
also held that the action was not removable under 28 U.S.C. 1442(a)(1)

11

The Honorable Miles W. Lord, District Judge, United States District Court for
the District of Minnesota

12

Our subsequent discussion focuses on the Aberdeen court's theory that the fact
of preemption of plaintiff's state law claim is a ground for removal. Our
rejection of this theory a fortiori disposes of the Duluth court's belief that a
defendant's mere assertion of preemption provides a basis for federal
jurisdiction. See note 15 infra

13

The only alternative ground for removal jurisdiction asserted by defendants in

the two present cases was 28 U.S.C. 1442(a)(1), quoted in note 4 supra. This
section, in part, allows removal of any action brought in state court against a
"person acting under" an officer of the United States, "for any act under color
of such office." We have carefully reviewed the arguments made on this point
in the parties' trial court memoranda, and we agree with the district courts that
(1) defendants were not "part(ies) acting under" the Comptroller, and (2) the
name changes were not "act(s) under color of (the Comptroller's) office." See
notes 6 & 10 supra. We therefore hold that the cases were not removable under
28 U.S.C. 1442(a)(1)

14

28 U.S.C. 1331(a) (1976) provides in part:

The district courts shall have original jurisdiction of all civil actions wherein
the matter in controversy exceeds the sum or value of $10,000, exclusive of
interest and costs, and arises under the Constitution, laws, or treaties of the
United States. . . .
Id. 1337(a) provides in part:
The district courts shall have original jurisdiction of any civil action or
proceeding arising under any Act of Congress regulating commerce or
protecting trade and commerce against restraints and monopolies. . . .
"In all respects other than amount in controversy, Section 1337 and Section
1331 are read alike and the same tests apply in determining whether a case is
one 'arising under' federal law." 13 C. WRIGHT, A. MILLER & E. COOPER,
FEDERAL PRACTICE AND PROCEDURE 3574, at 503 (1975) (footnote
omitted). For purposes of our discussion, we assume the district courts' findings
that the value of plaintiffs' rights exceeded $10,000 and that the NBA was an
"Act of Congress regulating commerce" were correct.

15

This approach to determining the existence of removal jurisdiction was adopted

by the Aberdeen court. In contrast, the Duluth court held that the presence of a
"basic dispute" between the parties as to preemption was, in itself, enough to

confer removal jurisdiction. The only practical difference between the two
approaches is a somewhat anomalous result of the Duluth theory: under that
analysis, the removal court would retain jurisdiction of a case, even after
concluding there was no federal preemption and plaintiff raised only state law
claims
16

The Labor Management Relations Act 301(a), 29 U.S.C. 185(a) (1976),

provides in part:
Suits for violation of contracts between an employer and a labor organization
representing employees in an industry affecting commerce as defined in this
chapter . . . may be brought in any district court of the United States having
jurisdiction of the parties, without respect to the amount in controversy or
without regard to the citizenship of the parties.

17

See notes 6 & 14 supra

18

Although the current rules of the Comptroller provide for an administrative

hearing upon request of an interested party, it has been expressly held that
neither the NBA nor the Administrative Procedure Act requires the
Comptroller to hold a hearing before making his determinations. See, e.g.,
Camp v. Pitts, 411 U.S. 138, 140, 93 S.Ct. 1241, 1243, 36 L.Ed.2d 106 (1973)
(decision whether to charter a new bank); Webster Groves Trust Co. v. Saxon,
370 F.2d 381 (8th Cir. 1966) (same); Merchants & Planters Bank v. Smith, 380
F.Supp. 354, 361 (E.D.Ark.1974) (decision whether to permit establishment of
a branch bank), aff'd, 516 F.2d 355 (8th Cir. 1975)